Socio-Economic Impact of Mobile Broadband in Thailand and Contribution to the Digital Economy April 2015

Socio-economic impact of mobile broadband in Thailand and contribution to the digital economy April 2015

About the GSMA Copyright © 2015. Analysys Mason Limited has produced The GSMA represents the interests of mobile operators the information contained herein for the GSMA. The Contents worldwide, uniting nearly 800 operators with more ownership, use and disclosure of this information are than 250 companies in the broader mobile ecosystem, subject to the Commercial Terms contained in the contract 1 Executive summary 2 including handset and device makers, software between Analysys Mason Limited and the GSMA. 1.1 Key findings 2 companies, equipment providers and Internet companies, as well as organisations in adjacent industry sectors. The Analysys Mason Limited GSMA also produces industry-leading events such as Bush House, North West Wing 2 Introduction to the study 8 Mobile World Congress, Mobile World Congress Shanghai Aldwych 2.1 Background and objectives 9 and the Mobile 360 Series conferences. London WC2B 4PJ 2.2 Structure of this report 9 UK For more information, please visit the GSMA corporate Registered in England No. 5177472 website at www.gsma.com/spectrum 3 The telecommunications market in Thailand 11 Tel: +44 (0)20 7395 9000 3.1 Summary of broadband network availability 12 Follow the GSMA on Twitter: @GSMApolicy Fax: +44 (0)20 7395 9001 3.2 Thailand’s digital economy goals, and the role of the mobile sector 16 [email protected] www.analysysmason.com 4 Benefits from broadband networks and services 18 4.1 Economic impact 19 4.2 Digital inclusion and other social impacts 21

5 Supporting the development of the mobile market 28 in Thailand 5.1 Spectrum assignment 28 5.2 Effective regulation 30 5.3 Managing network costs 31 5.4 Ensuring a level playing field with state-owned companies 32

6 Recommendations for mobile broadband growth 34

Annex A: Methodology for economic impact assessment 38 Annex B: Modelling inputs and assumptions 42 Annex C: International examples of digital economy initiatives 43

Erik Almqvist, Janette Stewart and Gergana Rangelova Ref: 2002941-103

Executive summary | 1 Socio-economic impact of mobile broadband in Thailand Socio-economic impact of mobile broadband in Thailand

Executive Summary

Analysys Mason was appointed by the GSM Association (GSMA) to examine developments in the mobile broadband market in Thailand and the socio-economic benefits associated with these developments. The report also discusses how government policy in Thailand can support the realisation of these benefits, providing a significant boost to the government published goals for further development of the digital economy. Key findings from the study are as follows:

1.1 Key findings Economic impact of broadband As operators invest in deploying new mobile The market in Thailand is at a crossroads: despite an Mobile broadband is thus an important enabler for the What this implies for the Thai economy is that infrastructure, economic activity and new jobs initial delay, the commercial launch of 3G networks digital economy and for digital inclusion. In particular, a cumulative GDP increase of USD23 billion associated with the deployment of network saw a substantial increase in the use of mobile data by further stimulating mobile broadband take-up, (THB730 billion) could be created by the end of infrastructure is created. Spill-over effects also occur, 4. In addition to this GDP increment, the roll-out services; therefore strong demand for 4G is now widely Thailand will benefit from a range of positive socio- 2020 such that the impact on the wider economy and of new broadband infrastructure (including mobile anticipated. However, since the planned award of 4G economic impacts leading towards early achievement the associated social impact can be far-reaching, broadband) is expected to create a positive impact spectrum in Thailand has been delayed, some operators of the six pillars of the ‘Digital Economy Plan’ that the improving productivity, fuelling innovation and driving on the jobs market in Thailand by creating new skilled have moved ahead with initial deployments of 4G Government of Thailand has published. Key to this is the creation of new businesses as well as providing jobs. This will contribute positive changes in the general within spectrum that has been re-farmed from 3G use.1 the release of spectrum for 4G, along with policies improved access to personalised healthcare, online population and the workforce in Thailand by developing Although the 4G spectrum award has been delayed, aimed at promoting a truly competitive, dynamic, services and facilitating smart cities. abilities and skills to use new infrastructure and the the government of Thailand has strong ambitions to investment-led mobile sector. latest emerging technologies. turn Thailand into a digital economy, which ultimately As few empirical studies exist that investigate depends on better broadband infrastructure – including the socio-economic impact of mobile broadband A significant proportion of these benefits could come mobile infrastructure – being available. specifically, we have estimated the impact of total from mobile broadband specifically (compared to broadband penetration (number of connections) broadband as a whole), assuming that the legislative on economic prosperity.2 We define ‘broadband’ to and policy environment in Thailand continues to include both fixed and mobile broadband connections, support the mobile sector (e.g. in terms of availability including the use of smartphones for data, but of sufficient spectrum to enable investment in new excluding basic mobile handsets.3 technology and infrastructure). Based on the modelling we have conducted, we estimate that if the Thai authorities are able to facilitate the development of a vibrant broadband market (which will also meet the targets set by the Digital Economy Plan), broadband connections penetration in the country could increase from 52% in 2013 to 133% by 2020.

2. There is a lack of published empirical studies isolating the effects of mobile broadband from those of broadband networks more generally as a result of the relatively recent introduction of mobile broadband to 1. This is using spectrum in the 2.1GHz band. the market. Hence most published studies refer to benefits generated by broadband connections of all types. 3. Previous studies investigating the impact of broadband on the economy may not be comparable with the current study due to differences in the definition of broadband penetration (e.g. the difference between broadband penetration and broadband connection penetration, the latter exhibiting diminishing returns as users get more than one broadband connection), differences in technology mix, as well as differences in penetration forecasts. 4. The GDP increment is expressed in nominal terms. The estimated GDP impact is not discounted (e.g. it does not take into account the time value of money). For comparison, the equivalent amount based on USD PPP (Purchasing Power Parity) – the basis used in some other reports for estimating socio-economic impacts - would be USD56billion 2 | Executive summary Executive summary | 3 Socio-economic impact of mobile broadband in Thailand Socio-economic impact of mobile broadband in Thailand

Social impacts of broadband and the role Policy considerations to support the of mobile broadband as an enabler for the realisation of mobile broadband benefits digital economy Although difficult to quantify in monetary terms, In Thailand, operators have focused on the e-money In addition to the award of 4G spectrum, there are • While advanced 3G and 4G technologies enable social benefits constitute an important part of the and e-commerce fields to date but it is expected that a number of other areas where appropriate policy mobile networks to carry mobile data traffic more overall value of broadband investments. In Thailand, the further roll-out of 4G infrastructure will provide and regulation will be required to ensure that mobile efficiently, operators need to ensure that the costs these social benefits are particularly relevant since the a platform to significantly extend current offerings broadband develops successfully in Thailand: of rolling out new technologies are managed in the most efficient way.Voluntary infrastructure sharing government of Thailand has published a series of digital both in terms of availability and take-up as well as • Ensuring a level-playing field with state-owned has been shown in other markets to be one way economy goals as part of its Digital Economy Plan. generating new ones. Successful applications already companies. Network competition in the mobile offered in Thailand that are well aligned with the of achieving this, while also potentially providing In the wider Asia–Pacific region, mobile operators have market and in telecoms services more broadly government of Thailand’s digital economy goals other benefits such as better availability of services been very active in participating in this digitisation. has been shown to provide various advantages include the ‘Farmer Information Superhighway’ through further roll-out into less populated areas. Among the digital initiatives launched by major internationally. Telecommunications policy in service from DTAC, and the ‘True-Money’ e-payment operators around the world, tracked by Analysys most markets is aimed at promoting competition • Establish a business-friendly environment for the service from True. Mason’s Digital Economy Readiness Index (DERI),5 the at various levels, including the provision of retail operators to compete in, through transparency Asia–Pacific region stands second after Europe in terms services and in wholesale markets. The benefits and open consultation to maximise certainty for of the number of reported initiatives, for example, with that competition can bring about in the mobile investment in new technology. market include incentivising further infrastructure cloud-based services, mobile money (m-money) and • A competitive market outcome is more likely if roll-out and investment in new mobile technologies mobile health (m-health) being key applications for the currently available mobile spectrum for 4G is (and extending mobile network reach into rural mobile operators in the region. assigned as soon as possible, through a process areas). This, along with appropriate regulation in involving the existing operators. This will ensure other parts of the telecoms market (e.g. in terms of that the three largest mobile operators in Thailand wholesale access) is widely recognised to contribute can obtain the spectrum that they need to extend to increasing take-up, falling prices and better the initial 4G roll-out that is now underway,6 using availability of mobile services. spectrum that is internationally harmonised for • Effective regulation is needed to ensure the 4G. Similarly, any spectrum that becomes available successful implementation of 4G as well as to for 4G in future – such as in the 700MHz, 2.3GHz, oversee the effective functioning of competitive 2.6GHz or other bands – should be assigned using mobile markets more broadly. International an appropriate, market-based process to award experience suggests that an independent regulator spectrum licences, in line with international best – structurally and functionally separate from the practice. government – is essential to ensure greater investor • In Thailand, the existing 2G/3G networks using confidence and hence leads to further investment the 900MHz and 1800MHz bands, along with the being made in new technologies. Market based 850MHz band, currently support millions of mobile approaches to spectrum assignment are appropriate users. These bands are therefore essential to the when new spectrum licences are being awarded, and three largest mobile operators in Thailand to ensure when demand for licences might exceed the supply continued availability of mobile services as well as to of spectrum. Greater clarity in Thailand concerning expand the availability of mobile broadband services the roles of the government and the NBTC will be using 3G and 4G technology, thereby supporting fundamental to create a successful 4G spectrum the government of Thailand’s digital economy award. In particular, the NBTC, working under the objectives. Thus, spectrum currently used by mobile policy guidance of the government of Thailand, operators for 2G/3G in these bands should continue should be responsible for defining and implementing to be available – with suitable licensing certainty to the 4G spectrum award – and for monitoring the the operators – to encourage continued investment. subsequent network implementation against any licence conditions (e.g. coverage or roll-out requirements). Ensuring that all spectrum used for 2G, 3G and 4G services is administered via a licensed regime (rather than under concession) is also an important goal.

5. Digital Economy Readiness Index (DERI), published by Analysys Mason’s Research division, is a compilation of more than 340 digital economy initiatives by 32 of the largest operators worldwide. 6. Initial 4G services in Thailand are being delivered using spectrum in the 2.1GHz band, in view of a lack of spectrum available to the three large operators in other bands.

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Figure 1.1

Mobile sector alignment with the six pillars of the government of Thailand’s Digital Economy Plan

Digital Economy Mobile sector contribution Key policy enablers Key risks goal Sufficient spectrum to enable effective provision of Roll-out of new 4G mobile countrywide infrastructure and Insufficient spectrum per Hard network infrastructure services operator affecting the roll- Investment in new mobile infrastructure Availability of sufficient fixed out of new services broadband technologies backhaul (e.g. fast-fixed broadband network)

Improvements to ICT abilities and Legislative support to lower Lack of accountability skills of the population/workforce cost for mobile network and fairness in spectrum Opportunity for individuals to be investment e.g. appropriate Soft allocation and assignment employed in skilled jobs, through spectrum governance, voluntary (e.g. lack of an independent infrastructure building of new mobile networks infrastructure sharing, removal regulator), affecting and related mobile services of barriers to consent for new investor confidence development opportunities radio masts and sites, etc. Alignment with digital economy goals Policies targeted at improving ICT infrastructure access and As described above, the mobile sector in Thailand is already supporting the achievement of the six pillars of the use in rural areas Lack of long-range Release of additional spectrum government of Thailand’s Digital Economy Plan. The contributions of the mobile sector towards achieving the six Service Access to country-wide mobile (strategic) planning to mobile (e.g. APT700 band pillars of the plan are summarised in figure 1.1. broadband services to support emerging infrastructure for wide-area coverage) technological opportunities Government services digitisation and establishment of e-government

Increase in broadband connections Policies to promote a vibrant Lack of long-range Promoting/ penetration broadband market e.g. (strategic) planning to Implementing Substantial increment in GDP* achievement of the goals of the support development of a Creation of new skilled jobs Digital Economy Plan digital economy

Building awareness of the Internet and developing digital Lack of awareness and Development of m-applications skills education towards the Digital to support local services e.g. Policies to enhance digital under-served to adapt education and health, as detailed in society literacy and development of to emerging mobile this report local content (i.e. to encourage technologies use of e-learning applications)

Development of m-applications Lack of awareness and tailored to specific sectors in the Policies to incentivise education towards the Digital Thai market e.g. Farmer Information businesses to enter the mobile under-served to adapt knowledge Superhighway, as detailed in this economy to emerging mobile report technologies

*refers to broadband in general, including mobile broadband Source: Analysys Mason, 2015

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2.1 Background and objectives

The mobile market has undergone significant changes operators in the market have begun 4G network roll- in recent years, with substantial increases in mobile out, although this is currently being done using the data usage taking place in both emerging and operators’ existing 3G spectrum (in the 2.1GHz band), in developed nations across the globe, and the industry the absence of other suitable 4G spectrum being made making a generational shift in mobile data technology, available. An award of mobile spectrum in the 900MHz 2 from 3G to 4G networks. and 1800MHz bands, suitable for 4G use, is anticipated to happen in 2015. Mobile broadband is emerging as a popular choice for the delivery of high-speed broadband services, As well as benefiting the national economy, the both in locations where it acts as a complement to mobile sector also contributes towards achievement Introduction to fixed services as well as in the absence of satisfactory of the ‘digital economy’, encompassing a range of fixed connections. There is evidence that mobile positive social benefits. The government of Thailand users are increasing their mobile data usage as they has recognised the importance of fostering the gain access to smartphones and other data devices. digital economy and has set out a ‘Digital Economy Mobile networks have a particularly key role to play in Plan’ containing six policy ’pillars’, which are aimed the study connecting people living in remote areas. at accelerating digital economy infrastructure roll- out, extending digital knowledge and supporting the The mobile sector therefore plays a key role in today’s availability of new digital services.8 The six pillars of broadband market, which delivers large benefits the plan span a series of high-level targets associated to national economies. The economic impact of specifically with better infrastructure availability, broadband connections – of all types – has been growth in services, digital economy promotion, digital Analysys Mason has conducted a study for the GSM Association the subject of extensive empirical research, and this society and the furthering of digital knowledge and previous research has established a strong link between (GSMA) on the socio-economic impact of mobile broadband information.9 broadband connectivity and gross domestic product services in Thailand, and the contribution that mobile broadband (GDP) growth both in developed and emerging nations, With this in mind, and in light of substantial increases in services can make towards achieving the six pillars of the Digital as well as a linkage between increasing broadband demand for 3G mobile data services and the pending 7 connections and job creation. award of spectrum for 4G, Analysys Mason was asked Economy Plan that the government of Thailand has set out. by the GSMA to conduct this study to set out the In Thailand, mobile networks witnessed a substantial economic and social impacts from broadband services increase in mobile data demand in recent years, similar in Thailand. to trends in many other markets. 3G networks are now well established and two of the largest mobile

The study has two key objectives:

• To quantify the socio-economic impact of increasing broadband penetration in Thailand (in terms of GDP and jobs impact), and to identify other qualitative effects (e.g. social impact), and how these align with Thailand’s Digital Economy Plan.

• To highlight international best practice to accelerate investment in mobile broadband services, in the context of ensuring that government policy– in respect of spectrum and other key inputs to the mobile market – supports the further development of 4G mobile broadband services.

7. http://thailand.prd.go.th/view_news.php?id=7549&a=2. 8. Digital Asia One (see: http://digital.asiaone.com/digital/news/mapping-pillars-digital-economy-thailand); GSMA RFP. 9. Nation Multimedia (see: http://www.nationmultimedia.com/business/Govt-unveils-themes-for-digital-economy-plan-30247713.html).

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The telecommunications 3 market in Thailand

Substantial changes have taken place within the mobile sector in recent years, with significant increases in mobile data usage in developed and emerging nations across the globe, changes to market structures and a generational shift in mobile data technology, from 3G to 4G networks.

These trends are expected to continue over the next data usage has grown quickly. The operators in few years, as operators continue to enhance both 3G Thailand therefore face similar challenges to those in and 4G networks to provide the increased coverage other markets around the world in that they are under and capacity required to support the massive demand pressure from customers to migrate from 2G to 3G, that is now being witnessed for mobile broadband while also rolling out advanced mobile broadband services. There is evidence that, even with the technologies (3G and 4G). In particular in Thailand, the introduction of 4G, the use of 3G networks is continuing strong growth in mobile data traffic has resulted in two to rise in some markets. This rise is potentially a result of the largest operators rolling out 4G (LTE and LTE- of 3G networks improving the quality of their services Advanced) within their 3G spectrum, a move prompted and encouraging 3G users to consume more data, as by delays to auction 900MHz and 1800MHz spectrum. heavy data users migrate to 4G. In the remainder of this section we give a brief overview In Thailand, the roll-out of 3G networks was initially of the fixed and mobile broadband markets in Thailand, delayed while the three largest operators awaited the which provides the context for the rest of this report. assignment of 3G spectrum. However, once spectrum in the 2.1GHz band was licensed for 3G use, mobile

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Mobile broadband penetration in Thailand is now mobile network coverage by the three main operators growing rapidly, after a late start in the market while in Thailand is now extensive, and AIS and True Corp Summary of broadband network availability the award of 2.1GHz 3G licences was awaited. Figure provide 2G and 3G coverage to around 97% of the Thai 3.1 3.2 shows mobile broadband penetration in Thailand population. 4G coverage is currently limited to specific as compared to the average from selected emerging urban areas, pending further spectrum award. Thailand is currently on the brink of an explosion in terms of broadband connectivity. When looking at overall ICT countries in the Asia–Pacific region. Both 2G and 3G development, Thailand scored 4.8 in 2013 according to the ICT index of the International Telecommunication Union

(ITU), and is ranked tenth in the Asia–Pacific region. Thailand is at the upper end of the developing countries’ Figure 3.2 group in terms of ICT maturity and it is likely that, given facilitating policies, it will pass the ICT development threshold before 2020. A brief summary of the mobile and fixed markets in Thailand in the context of broadband Mobile broadband penetration in Thailand vs. average from selected availability is provided below. emerging and developed Asia–Pacific countries11

150% Mobile networks The mobile market in Thailand is dominated by The three major operators all provide 2G and 3G 125% Advanced Info Service (AIS), Digital Total Access services using GSM, GPRS, EDGE, W-CDMA and Communication (DTAC) and True Corp, which together HSPA+ technologies. Recently, True and DTAC have serve the majority of Thailand’s mobile market. Three launched 4G services using LTE, in the 2.1GHz spectrum other operators share just over 1% of the market (the previously awarded for delivery of 3G services. Further 100% total mobile market share is shown in Figure 3.1). Two 4G roll-out is expected pending award of further of the smaller operators, TOT and CAT Telecom, are spectrum. owned by the Thai State, via the Ministry of Finance.10 75%

Figure 3.1 50% Total mobile market share of connections

25%

AIS CAT Telecom (my) 45.58% 0.49% 0%

2010 2019

TOT 0.71% Thailand Emerging APAC Developed APAC selected countries selected countries

Source: Analysys Mason, 2015

Despite a delay to the 3G launch, Thailand compares Although further 4G-suitable spectrum was to be well to other emerging countries in the Asia–Pacific made available in Thailand in 2014, the change in True Corp 24.29% region in terms of the number of smartphones now government that took place during 2014 led to delays in DTAC in use. According to estimates from Analysys Mason’s this process. As previously mentioned, it is hoped this 28.91% Research division, the proportion of mobile subscribers further spectrum award in the 900MHz and 1800MHz using smartphones will grow to 70–80% by 2019, which bands will take place in 2015. Source: GSMA Intelligence, 2015 is in line with other emerging Asia–Pacific countries.

10. TeleGeography. 11. Emerging APAC includes: Bangladesh, India, Indonesia, Malaysia, Pakistan and Vietnam; developed APAC includes: Australia, Hong Kong, Japan, Singapore, South Korea and Taiwan.

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Fixed networks Although growth in fixed broadband connections has the emerging Asia–Pacific region, based on estimates slowed down in many markets, modest growth is still from Analysys Mason’s Research division. Operators Fixed broadband services in Thailand are currently CAT Telecom, another state-owned operator, has been evident and high-speed broadband (e.g. fibre) is a in Thailand are aiming to increase fibre coverage, and delivered over a mix of DSL and fibre networks. developing its ‘Hi-Net’ retail brand in 2014, whereas AIS, core growth area in markets where fibre investment the government of Thailand’s rural broadband funding which also provides mobile services and previously only is planned. As shown in Figure 3.4, growth in fixed programme has been targeted to extend the reach of The fixed broadband market in Thailand is served offered business DSL services, is now deploying fibre broadband connections in Thailand is forecast to be fixed networks into more remote areas. by True Corp, which also offers mobile services and services to cover 250 000 homes in 2015. The split of very similar to that of a number of other countries in holds the largest market share, along with Triple T market share by provider is summarised below. Broadband and the state-owned operator TOT (which also has a minor market share in the mobile market). Figure 3.4

Fixed broadband penetration of households in Thailand vs. average from selected emerging and developed Asia–Pacific countries Figure 3.3

Share of retail subscribers in the Thai fixed broadband market

100%

True Corp Other players (inc. AIS, TT&T) 37% 1.30% 80%

CAT TELECOM 60% 2.90%

40%

20% TOT

29.30% Triple T Broadband 29.50% 0%

2010 2019

Source: Analysys Mason, 2015 Thailand Emerging APAC Developed APAC selected countries selected countries

Source: Analysys Mason, 2015

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3.2 Thailand’s digital economy goals, and the role of the mobile sector

Over the last few years a number of frameworks and digitisation and placing Thailand at the digital forefront policies have been put forward aiming at stirring the in the Association of South-East Asian Nations region. ICT landscape in Thailand. These include, among others, The plan has been positioned as a policy with high the Smart Thailand 2020 project, the third ICT Master importance for the development of the Thai economy Plan 2014–2018, the USO Master Plan for Provision of and placed under the direct leadership of the Deputy Basic Telecommunication Services (2012–14) and the Prime Minster. National Broadband Policy (2009). More often than Two goals, to be achieved within a five-year period, not, the different policies and frameworks have had have been set by the plan, namely 1) doubling the overlapping goals and provide a generic direction number of Internet users (from approx. 20 million rather than concrete actionable targets. currently) and 2) doubling the total value of ICT In November 2014, the government of Thailand products and services (from approx. THB700 billion announced a new Digital Economy Plan aimed at currently). increasing economic and social prosperity through

The six pillars of the Digital Economy Plan are:

• hard infrastructure – ICT infrastructure, including a nationwide high-speed broadband network, data centres and digital gateways, with the aim of increasing the access to and affordability of Internet services

• soft infrastructure – regulations related to cyber-security for the digital economy

• service infrastructure – services provided to businesses and individuals

• digital economy promotion – promoting the benefits of a digital economy to businesses and the wider society

• digital society – increasing the knowledge of new technologies for improving the quality of life and work environment

• digital knowledge and information – making accessibility easier through digitisation of services/content

Implementation of the Digital Economy Plan envisages able to fully implement the planned policies, the Digital involvement of all stakeholders – the government, Economy Plan has the potential to make a significant regulators, businesses and individuals – in achieving contribution to the economic and social wellbeing of the stipulated goals. If the government of Thailand is the Thai population.

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Benefits from 4.1 Economic impact A number of methods have been used in estimating The new Digital Economy Plan holds good prospects the impact of broadband on economic prosperity.12 for boosting the economic and social wellbeing of the broadband networks This report draws upon the methodology developed Thai population. For example, releasing 4G spectrum for a recent report prepared by Analysys Mason for and the related infrastructure build by operators will 4 the GSMA on the socio-economic benefits of mobile result in direct benefits for the economy. Further, and services broadband in the Asia–Pacific region.13 Our estimates pent-up demand for data and supportive government- showed that, depending on a country’s ICT maturity, a led demand-side policies could create favourable 10 percentage point increase in broadband connections conditions for enhancing Thailand’s ICT standing more penetration leads to an increase in GDP of between broadly. 0.26% and 0.92%. In terms of job creation, an addition If the Thai authorities are able to facilitate the of 1000 new broadband connections can result in the development of a vibrant broadband market and A wide range of socio-economic benefit studies have There is therefore a clear link between more creation of up to 33 new jobs across the economy.14 meet the targets set by the Digital Economy Plan, we been published in relation to telecommunications, widespread provision of broadband infrastructure Countries with a developing ICT sector see benefits forecast that broadband connections penetration in both by the GSMA and industry parties as well as – including mobile – and achievement of the mainly from direct effects, whereas nations with a the country may increase from 52% in 2013 to 133% by by regulators and policy makers. Most studies focus infrastructure pillars of the government of Thailand’s developed ICT sector see benefits from indirect and 2020. What this implies for the Thai economy is that a on the benefits from the availability of broadband Digital Economy Plan. As described above, the induced effects. Within the Thai context, a number of cumulative GDP increment of USD23 billion (THB730 infrastructure of all types (i.e. including mobile economic benefits from infrastructure investment – adjustments have been made to take into account the billion) could be added by the end of the period. broadband, but also fixed and other forms of both fixed and mobile – can also be quantified in terms specificities of the country. broadband connections, such as satellite). of the link between broadband connections (through The GDP increment is expressed in nominal terms.15 Due Thailand is at the brink of an explosion in broadband more infrastructure), GDP and jobs. to Thailand’s ICT development level, higher economic The basis of these studies is that there are three main connectivity, but has been held back from reaching benefits are expected to be realised within the initial routes through which broadband infrastructure and In the remainder of this section we set out the analysis ICT maturity in the past few years due to a number of few years of this period, with diminishing marginal services have an effect on the economy – direct, conducted for this study into the economic impact of factors, including: benefits thereafter. In particular, our estimations show indirect and induced: increased broadband connectivity on the economy • lack of spectrum availability for mobile broadband that Thailand is likely to enter a phase of ICT maturity in Thailand. The analysis covers GDP growth and new • Direct effects are usually short term and are related and the delayed award of 4G spectrum in 2016, thereafter shifting to the ICT mature nations’ jobs, as well as the social benefits arising from the to the deployment of infrastructure, i.e. construction group. The ICT development level is defined according mobile sector in particular, and examines how these • political change, which has induced general works as well as other associated economic to ITU’s ICT development index. ITU ranks 150 countries contribute towards a flourishing, well-functioning economic and social uncertainty in Thailand and activities. around the world according three aspects: ICT digital economy. contributed to delays in key policies such as the readiness (level and access to ICT infrastructure), ICT • Indirect effects concern improvements in award of 4G spectrum productivity and efficiency that are possible as intensity (level of use of ICT in the society) and ICT • lack of actionable broadband policy targets and new technologies allow faster and more optimised impact (the result/outcome of efficient and effective related implementation efforts 16 processes. ICT use). • absence of liberalisation of spectrum concessions, • Induced effects occur in the long term as innovations In addition to the GDP increment, the roll-out of new and the continued use of build-transfer-operate and new ideas diffuse throughout society, creating broadband infrastructure (including mobile broadband) arrangements rather than fully competitive a favourable environment for new services and is expected to create a positive impact on the job processes for mobile broadband spectrum business models. market in Thailand by creating new skilled jobs. This will assignment. contribute positive changes in the general population and the workforce in Thailand through developing abilities and skills to use new infrastructure and the latest emerging technologies.

12. The main methods used to estimate the economic benefits of increased broadband penetration include: multivariate regression modelling, input/output analysis, cost–benefit analysis and the multiplier approach. 13. See “Today, tomorrow and the future – managing data demand in Asia Pacific” at: http://www.gsma.com/spectrum/today-tomorrow-and-the-future-managing-data-demand-in-asia-pacific/. 14. Further details of the methodology can be found in Annex A. 15. The estimated GDP impact is not discounted (e.g. it does not take into account the time values of money). For comparison, the equivalent amount based on USD PPP (Purchasing Power Parity) – the basis used in some other reports for estimating socio-economic impacts - would be USD56billion. 16. See Annex A for further details. 18 | Benefits from broadband networks and services Benefits from broadband networks and services | 19 Socio-economic impact of mobile broadband in Thailand Socio-economic impact of mobile broadband in Thailand

Benefits are likely to arise both from ‘connecting the Potential threats that may jeopardise the impact of unconnected’ as well as from improving efficiency and broadband on the Thai economy, include, among productivity through having additional connections. others: Digital inclusion and other social impacts During the initial phase up to 2016, benefits are to be 4.2 • political change leading to general economic and derived mainly from direct effects linked, for example, social uncertainties; to the construction of new infrastructure related to the Some of the social benefits arising from broadband Cloud-based services can benefit from availability of development of a fast fixed broadband network as well • delayed implementation of the digital economy- connectivity are well documented, having been the latest technologies being deployed within mobile as investments in 4G infrastructure. As these effects related policies of the government of Thailand, and linked to the availability of connectivity more broadly networks, to enable better streaming of digital content diminish beyond 2016, indirect and induced effects, most importantly the release of 4G spectrum in various previous studies. In particular, improved and data. It is noted that better streaming capabilities mainly in other industries (for example, industries that • failure of the government of Thailand to enact access to public services including healthcare services, within mobile networks is needed to respond to market make use of broadband networks) will become more demand-side policies that aim to increase broadband education and other online services are some of the developments occurring in Thailand as in most other prevalent leading to long-term structural changes in adoption, for example policies enhancing ICT literacy areas where broadband connectivity is known to play countries around the world – such as in use of social employment and economic output. These effects may and computer skills; incentivising the development an increasingly important role. These benefits are media, for example, where significant amounts of be, for example, improvement of productivity as a result of relevant content and applications (including discussed in a recent report prepared by Analysys data (e.g. photos and videos) are being consumed of the adoption of more efficient business processes, e-government services and related applications) as Mason for the GSMA on the socio-economic benefits of by mobile users via web services such as Facebook, acceleration of innovation and new business creation well as incentivising businesses to enter the digital mobile broadband in the Asia–Pacific region, where it Twitter and Instagram. These trends will be enabled 17 enabled by the high-speed braodband infrastructure. economy. highlighted that: by the latest technology advances in 4G – and in Thus in this phase Thailand will derive benefits from particular, LTE-Advanced, which a number of operators • Mobile health applications facilitate rapid diagnosis increased broadband penetration, which are in line It is noted that a significant proportion of the benefits in other countries in the Asia–Pacific region, and of critical conditions, improve access to specialised with the benefits reaped by nations with a developed stated in this section could come from mobile globally, are now rolling out. However, while the use treatment, and act as a platform for remote ICT sector. broadband specifically (compared to broadband as of LTE-Advanced enables operators to substantially monitoring and disease prevention. a whole), assuming that the legislative and policy improve network capacity, speed and quality, this The estimated benefits for the Thai economy depend environment in Thailand continues to support the • E-learning is becoming an important pillar in also requires access to additional spectrum in order on favourable overall developments in the country and mobile sector (e.g. in terms of availability of sufficient building knowledge-based societies and opening to keep pace with market and customer needs. It is the successful implementation of the policies set out by spectrum to enable investment in new technology and up education to everyone. It increases educational important that the spectrum deployed for 4G aligns the government of Thailand’s Digital Economy Plan. infrastructure). opportunities, acts as a platform for skill-building with internationally and regionally harmonised bands,

and promotes development in rural and remote both in terms of minimizing cross-border interference areas. with neighbouring countries but also to benefit from • Broadband can improve economic opportunities economies of scale in the equipment and handsets in these areas and help bridge the digital divide available for those bands. through improving productivity, providing Mobile operators, equipment vendors, Internet opportunities for non-agricultural jobs and fostering service providers, businesses and other organisations the growth of small- and medium-sized businesses. around the world are taking advantage of increasingly • Environmental effects from connectivity are also ubiquitous smartphone availability, improved mobile significant. For example, increased broadband data connectivity speeds and better network reliability connectivity allows more people to work from home, to offer new services to mobile users. For example, reducing the need for commuting and business m-money applications are a key area in which mobile travel, thus decreasing carbon emissions. operators are proactively offering new services, in partnership with financial institutions. • Smart electronic systems are making big steps in increasing efficiency of energy consumption, and the shift towards cloud computing may deliver significant gains in energy efficiency.

17. http://www.gsma.com/newsroom/press-release/more-spectrum-for-mobile-broadband-vital-boost-economic-growth-asia-pacific/

20 | Benefits from broadband networks and services Benefits from broadband networks and services | 21 Socio-economic impact of mobile broadband in Thailand Socio-economic impact of mobile broadband in Thailand

Digital economy initiatives undertaken by In Thailand, operators have mainly focused on the its position as Thailand’s leading high-speed home and e-money and e-commerce fields. It is expected that mobile Internet provider, expanding its high-speed operators the further roll-out of 4G infrastructure will provide HOME Internet network by investing Baht 33 billion to Within the mobile sector, operators around the world the Asia–Pacific region stands second after Europe a platform to extend current offerings both in terms expand its fibre network (FTTx). True’s objective is to are entering the digital economy, with initiatives in with 116 initiatives (see Figure 4.1). The number and of availability and take-up as well as generating reach approximately 4 million households in Bangkok different markets, driven by local and regional market range of initiatives available in the Asia Pacific region new ones. It is also noted that, given the vibrant and also to expand to upcountry nationwide to cover a trends. In the wider Asia–Pacific region, operators have are both as a result of the size of the region as well as digital initiative landscape in the Asia–Pacific region, total of 10 million households by 2016. This investment been very active in participating in the digitisation the availability of advanced 4G networks that have operators in Thailand may look into applying successful is specifically aimed at helping Thailand become a process. Among the digital initiatives launched by now been deployed in a number of countries within digital initiatives already launched in other markets regional hub for the digital economy. major operators around the world, tracked by Analysys the region. To date, cloud-based services, m-money in their home market, once 4G networks have been Examples of successful mobile digital economy Mason’s Digital Economy Readiness Index (DERI),18 and m-health are the key applications that operators established. In line with other markets around the initiatives in Thailand include DTAC’s mobile agriculture are focusing on. world, it is expected that high speed mobile broadband initiative (see Figure 4.2) and True’s m-money Figure 4.1 infrastructure will become increasingly integrated with application (see Figure 4.3). A number of international fixed infrastructure, both for consumer and business examples have also been given in Annex C. Overview of digital economy initiatives by region use. For example in Thailand, True Group is reinforcing

10% 8% Figure 4.2 1% 3% 3% 24% NORTH AMERICA 34% EUROPE Mobile agriculture initiative – DTAC case study 21% 62 18% 120 INITIATIVES INITIATIVES DTAC empowers Thai farmers through improving farming skills 13% 26% 13% 13% and information on market trends 5% 3% 3%2% The Farmer Information Superhighway – a farming application has been a key digital economy initiative undertaken by Telenor. It aims to provide local content to enable 6% 9% 6% 23% 4% 18% farmers to obtain market information, to exchange information and to have access to a 6% LATIN AMERICA ASIA PACIFIC nationwide (and potentially global) community.

24% 20% 17 116 Key Facts INITIATIVES 7% INITIATIVES Dtac’s ‘Farmer Information Superhighway’ is aimed at empowering Thai 10% Description 8% farmers with knowledge on agricultural topics: 59% MIDDLE EAST 32% 15% 2% & AFRICA 10% • Services delivered include useful tips on farming, access to a network of other farmers and academics for experts’ consultation as well as 3% 31 information on climate and weather INITIATIVES • It is also a platform for comparing product prices at major markets 19% 19% Digital economy Societal benefits are that it provides not only a way to farmers to reduce alignment costs, improve productivity and increase their yield but also increases the transparency of the market and farmers bargaining power within the market Mobile health Mobile financial services Mobile education Smart homes Mobile commerce and advertising* Cloud-based services Status Societal benefits are that it provides not only a way to farmers to reduce Mobile agriculture Mobile identity and security Venture capital – accelerator costs, improve productivity and increase their yield but also increases the transparency of the market and farmers bargaining power within the market * Mobile commerce and advertising also includes location-based services. Cloud-based services also includes OTT, mobile content, big data and software. Source: Analysys Mason’s Digital Economy Readiness Index (DERI), 2015 Source: Analysys Mason, 2015

18. The Digital Economy Readiness Index (DERI), published by Analysys Mason’s Research division, is a compilation of more than 340 digital economy initiatives by 32 of the largest operators worldwide. Each operator initiative receives a readiness score calculated across two distinct axes: its scale or type, and its maturity. An initiative’s scale or type is determined by its implementation size and characteristics.

22 | Benefits from broadband networks and services Benefits from broadband networks and services | 23 Socio-economic impact of mobile broadband in Thailand Socio-economic impact of mobile broadband in Thailand

Figure 4.3 As these initiatives demonstrate, the mobile sector in Thailand is already supporting the achievement of the six pillars of the government of Thailand’s Digital Economy Plan. The contributions of the mobile sector towards M-money application – True case study achieving the six pillars of the plan can be summarised as follows:

• Roll-out of 4G mobile infrastructure will result in mobile operators in Thailand investing in the latest mobile technologies available in the market place today (i.e. potentially LTE-A). This contributes directly to the TrueMoney contributes to ease of payments, stimulating a achievement of the government of Thailand’s priority for ‘hard infrastructure’ investment as the first pillar of the vibrant economy Digital Economy Plan. Achievement of this, for the mobile sector, relies on sufficient spectrum being available to support this roll-out. True has been leading in the e-Money space in Thailand, enabling its customers to execute payments easily and contributing to a vibrant economy. True has been at the forefront • Wider availability of 4G services will also contribute to achieving the ‘soft infrastructure’ pillar of the of innovation through this services e.g. introducing services such as the Touch SIM, the government of Thailand’s plan. The build of new mobile networks will create skilled ICT jobs, providing world’s first RFID-embedded contactless payment solution. As Thailand moves closer to a employment opportunities for individuals and the wider availability of mobile broadband services will cashless society, TrueMoney and related services (such as iTrueMart for ecommerce and contribute to improvement in overall ICT skill levels and abilities. True iContent for content and applications) are aimed at making Thailand a ‘connected society’. • The mobile sector can also support achievement of the third pillar of the plan – service infrastructure – by ensuring that mobile broadband services are available to a wide proportion of the Thai population, including the rural and remote areas. Release of additional sub-1GHz spectrum to mobile (e.g. in the 700MHz band) will Key Facts further contribute to this goal by reducing the cost of wide-area coverage provision. Additional spectrum in other internationally harmonised 4G bands, such as at 2.3GHz and 2.6GHz, will also be important to increase the Description TrueMoney is an e-wallet and payment service launched by True. capacity offered by 4G networks • Key services include bill payments, buying, transfers and withdrawals • As described earlier in this section, the increasing penetration of broadband (in terms of both fixed and mobile Mobile payments make it easier for consumers to execute payments, Digital economy connections) can be linked to a substantial increment in the GDP of Thailand, based on Analysys Mason’s bridging urban/rural divides and offering a platform for further innovation alignment estimates in this study. New skilled jobs linked to the build of new mobile networks and provision of advanced (e.g. contactless payment solutions) and contributing to a vibrant economy. mobile broadband services will also be created, as noted above. This aligns with the achievement of the ‘promoting/implementing’ pillar of the Digital Economy Plan. Status Launched in 2005, TrueMoney is the leading e-money and payment collection service in Thailand, with estimated ~ 25m customers and USD1.61bn transaction volume. True Money Wallet has been the #1 app in the • Development of mobile applications tailored to specific sectors of the Thai market (e.g. Farmer Information Thai Appstore since its launch. To further improve services for transferring Superhighway) and further development of mobile applications to support local services such as e-learning and money electronically, TrueMoney plans to provide a person-to-person e-health will enhance digital literacy amongst the population and build the digital capabilities of industry. This payment service during 2015 that allows the transfer of money between contributes to the achievement of the final two pillars of the Digital Economy Plan, in terms of ‘digital society’ customers lacking personal bank accounts. and ‘digital knowledge’.

This is summarised in Figure 4.4 below.

Source: Analysys Mason, 2015

24 | Benefits from broadband networks and services Benefits from broadband networks and services | 25 Socio-economic impact of mobile broadband in Thailand Socio-economic impact of mobile broadband in Thailand

Figure 4.4

Mobile sector alignment with the six pillars of the government of Thailand’s Digital Economy Plan

Policies targeted at improving ICT infrastructure access and use in rural areas Lack of long-range Release of additional spectrum Service Access to country-wide mobile (strategic) planning to mobile (e.g. APT700 band broadband services to support emerging infrastructure for wide-area coverage) technological opportunities Government services digitisation and establishment of e-government

Source: Analysys Mason, 2015

26 | Benefits from broadband networks and services Benefits from broadband networks and services | 27 Socio-economic impact of mobile broadband in Thailand Socio-economic impact of mobile broadband in Thailand

The government is now set to re-farm the spectrum 1800MHz bands) to be made available for 3G/4G in the 1800MHz and 900MHz bands for 4G. From the use as soon as possible, but will also need additional mobile industry’s perspective, three important points spectrum to be made available in the future to meet are worth noting: business needs. Certainty for the existing mobile Supporting the operators that further spectrum will be available (e.g. • Without access to 850MHz, 900MHz and/or in the 700MHz and other harmonised 4G bands) 1800MHz spectrum it is unlikely that the three in the mid-term will therefore be highly desirable commercial operators will be able to continue to development of the in order to support continued investment in better expand their 3G and 4G networks, since the 2.1GHz mobile broadband infrastructure. 5 band alone will not provide sufficient capacity to meet their individual 3G and 4G needs in a In terms of what future spectrum options might exist, mobile market in cost-efficient way. It is therefore important that it is noted that many other countries in the Asia–Pacific the available 900MHz and 1800MHz spectrum is region and worldwide have taken advantage of the assigned such that these demands can be met, and transition from analogue to digital television (mainly in Thailand that the regulatory environment provides stability UHF spectrum) to release a ‘digital dividend’ for mobile for the existing network operators to encourage use. A previous study published by the GSMA explored 4G infrastructure investment using these bands. the benefits of this in Thailand.21 A particular benefit The new assignment of these bands should enable of the 700MHz band is its favourable propagation The government in Thailand underwent significant data services, and are therefore seeking to deliver operators to obtain a guaranteed term of future conditions for provision of wide-area coverage for changes during 2014, with wide-ranging implications. higher data capacity with better coverage through tenure for the assigned spectrum. Best practice mobile broadband services, as well as the depth of From the mobile sector’s perspective, a key the roll-out of advanced 3G and 4G technologies – for internationally is that a 15-year or 20-year term coverage that this spectrum can provide indoors. As consequence of these changes is that spectrum which further spectrum is required. for mobile licences provides sufficient certainty to noted in the GSMA’s previous study, the 700MHz band suitable for 4G services which was to be awarded While the decisions that the government of Thailand operators to maximise network investment, although is therefore often seen as being particularly beneficial during 2014 has been delayed. Although the award makes about the award of 4G spectrum will have some markets are now moving to offering perpetual for improving rural coverage – which is a relevant of 4G spectrum is now planned for 2015, this is yet to significant implications for mobile operators, there are licences for mobile use with an initial pre-paid consideration in Thailand. Other relevant, internationally be confirmed. This has particular implications for the a range of other policy areas where policy-led actions period. harmonised bands for 4G use are the 2.3GHz and three largest operators in Thailand which, like many 2.6GHz bands, which can both provide additional might be required to ensure that 4G networks develop • The 1800MHz band has become a near-global operators in the Asia–Pacific region and worldwide, are spectrum to boost the capacity of 4G networks. successfully in Thailand. band for LTE deployment, and the 900MHz band witnessing significant growth in demand for mobile has scope to develop in this way, although it is It is also noted that a number of other countries in more commonly used for advanced 3G (HSPA and the Asia–Pacific region, as well as in North and South HSPA+) services in many countries at present. Both America, have already made spectrum in the 700MHz of these bands, along with the 850MHz band, will band available from their digital dividends. The Spectrum assignment be important for the provision of 3G/4G services 700MHz band therefore already benefits from being 5.1 for the three major operators in Thailand, as well a mainstream 4G spectrum option, and its use is likely as for the continuation of 2G services, although the to increase over the next few years as more countries Thailand’s mobile market operated only, before 2012, 900MHz and 1800MHz bands is still provided on a precise needs of operators for spectrum in each move to make this spectrum available. In particular, on a concessions model for spectrum assignment that concession basis by the two state-owned operators, band will depend on various factors. Technology- decisions of the ITU World Radiocommunication was unique to this market. Under this model, the two and hence this model still heavily influences the market neutral approaches to spectrum assignment giving Conference in November 2015 are likely to bring government-owned operators, CAT Telecom and TOT today. longer-term certainty of availability, as well as countries within ITU Region 1 (i.e. Europe, the Middle Telecom, issued rights to the three commercial mobile flexibility in terms of how spectrum is used by the East and Africa) in line with Region 2 and 3 countries In particular, DTAC and True use spectrum in the players to use spectrum on a concession basis. different players based on their own demands (e.g. in terms of allocation of the 700MHz band for mobile 850MHz band on a concession basis from CAT allowing operators to determine their own level of use, bringing significant benefits from the use of this 19 Since 2012, the spectrum licensing environment in Telecom, and AIS uses spectrum in the 900MHz band demand and technology needs) are therefore highly spectrum in terms of infrastructure, device ecosystems Thailand has been somewhat liberalised, with spectrum on a concession basis from TOT Telecom. The 1800MHz beneficial in this regard. and mobile roaming.22 for 3G use in the 2.1GHz band being the first to be band is used on a concession basis by AIS from TOT offered to the three largest commercial operators on Telecom, and by TRUE and DTAC from CAT Telecom. • Since the three major operators all provide 2G a licensed basis. However, the other spectrum used These concessions are all due to expire at various and 3G services, there is a need to ensure service by the three commercial operators in the 850MHz, points over the next few years.20 continuity for those services alongside 4G roll-out until such time as 2G (and eventually 3G) services are shut down. The implication of this is that the industry needs as much as possible of the currently available spectrum (in the 850MHz, 900MHz and

19. Whereas DTAC uses 850MHz spectrum on a concession basis from CAT Telecom, the 850MHz service from True is based on a wholesale-resale model whereby a subsidiary of True leases network equipment to 21. http://www.gsma.com/spectrum/gsma-urges-government-of-thailand-to-allocate-digital-dividend-spectrum-to-mobile/. CAT Telecom, with True reselling CAT Telecom’s 3G services under its ‘Real Move’ brand. 22. It is noted that 700MHz spectrum arrangements (i.e. band plans) differ between ITU Regions 2 and 3. Provisional plans for Region 1 may align countries in that region with the band plan that has been harmonised 20. The 1800MHz concession agreements for True and AIS have already expired. by the Asia Pacific Telecommunity for Region 3.

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5.2 Effective regulation 5.3 Managing network costs

Establishing an effective regulatory regime is a In relation to spectrum management, national As mobile networks are used for an increasingly broad Voluntary infrastructure sharing agreements between critical requirement to support the functioning of governance arrangements do differ in different range of services and applications, the contributions competing operators can potentially produce a number a competitive mobile market. Independence (i.e. a countries, however it is a common practice that the made to the national economy and to society, as of positive benefits, both for the operators concerned, regulator operating with a defined mandate, free of remit of many independent communications regulators described in this report, should grow. However, and for end users: government control) is an essential attribute for a around the world includes responsibility for spectrum the significant shifts that have taken place in the • They help operators to manage the risks associated regulator to be effective. management. Spectrum management is typically taken mobile market in recent years in terms of the rise with wide-area 4G roll-out by avoiding some of the to include the assignment of new licences, operating in mobile data usage and the migration from 3G to The structure of an independent regulator differs duplication of costs that may be associated with under policy guidance from the national government. 4G technology have also resulted in changes to the in markets around the world. In most countries, competing networks. An independent regulator is also responsible for structure of the mobile industry in many markets, converged regulators now oversee regulation of implementing market based approaches to spectrum as operators are faced with having to deliver higher • They can enable operators to extend coverage telecommunications and broadcasting services. assignment, which are appropriate when new spectrum data capacity and better coverage through roll-out of further into less populated areas than would have This form of regulation – undertaken by a body licences are being awarded, and in particularly where advanced 3G and 4G technologies while also managing been achieved without infrastructure sharing. In that is structurally separate from the government – demand for licences exceeds supply. the substantial costs that these roll-outs entail. particular, there are areas in most countries where typically ensures a greater degree of transparency total demand for services – and hence revenue – and accountability in decisions governing Given the existence of state-owned companies Hence, although the demand for mobile data services is not sufficient to support competing operators telecommunications policy. In turn this leads to various within the mobile market in Thailand, it will be in Thailand is accelerating the mobile operators’ needs providing services, and voluntary infrastructure positive benefits for the local market and for society important that spectrum assignment is managed for 3G expansion, and for 4G roll-out, the operators will sharing can help to overcome this barrier, enabling in terms of improved investor confidence in rolling out through an independent body rather than directly also need to manage the substantial costs that these further roll-out without impacting on the ability of new networks and services, creating greater availability by a government ministry. Greater clarity over the roll-outs entail in order to ensure that their business operators to continue to compete either in these of services for end users, and better quality of service. roles of the government of Thailand and the NBTC as models are sustainable and profitable, in line with other areas or in more densely populated areas (which, the regulator is thus essential for the upcoming 4G markets worldwide. An important function for independent regulators as noted in the following section, is likely to provide licensing – ensuring that the NBTC is responsible for is overseeing competition in telecommunications Some of the key infrastructure-related changes that benefits for users, from lower prices for mobile issuing licences (with appropriate licence conditions), markets, both in terms of retail services and in 4G roll-out implies, and for which costs need to be broadband services). based on policy agreed with the government of wholesale markets. managed, include: Thailand. Ensuring that all 2G/3G/4G mobile spectrum • They enable sharing of certain site assets such as

is available on a licensed basis (rather than under • a need to increase the number of sites required per fibre backhaul links. network to support higher levels of data use and to concession) is also an important goal. In line with international experience, it is therefore to be improve coverage for mobile broadband services recommended that the operators in Thailand are able • a need for densification of network architecture, with to make use of sharing arrangements (either passive, or greater need for many smaller (pico) cells, and the active) to the greatest extent possible. The government associated backhaul of Thailand should therefore ensure that there are no restrictions in place that might prevent these • a need for additional backhaul capacity both for arrangements from occurring as a result of commercial macro and pico cells. negotiations – notwithstanding any measures that One of the key ways that mobile operators have been might be considered in order to ensure effective able to manage the costs of network roll-out in other competition (as discussed in the next section). markets around the world is through infrastructure sharing. It is noted that in Thailand, there are some leasing agreements between operators to share tower space; however this does not extend to full radio access network (RAN) sharing.23

23. This is linked to the concessionary arrangements for spectrum, as noted previously.

30 | Supporting the development of the mobile market in Thailand Supporting the development of the mobile market in Thailand | 31 Socio-economic impact of mobile broadband in Thailand Socio-economic impact of mobile broadband in Thailand

5.4 Ensuring a level playing field with We provide below a summary of relevant considerations: • Investment in the latest 4G LTE-A infrastructure – the cost of rolling out advanced 3G and 4G services is state-owned companies considerable, and commercial operators are under pressure to manage these costs, as described in the previous section. For state-owned operators, competing demands for funding within different parts of the government can risk delaying the funds available to these operators to invest in the latest mobile technologies, resulting in There is much evidence to support the notion that network limited ability to invest. This risk of underinvestment, should it materialise, would affect the local users of these competition, generally through privately financed operators, networks (and visitors to the country looking to use the network on a roaming basis). has benefited telecommunications markets around the world. In particular, competition has often been shown to be an effective • Assignment of spectrum – as noted above, it is important in a liberalised market that spectrum assignment means of extending telecommunications coverage (both fixed should be implemented by a regulator independent of the government. The assignment process should allow each individual operator to meet its future network needs. Without this, there is a risk that the longer-term and mobile), as well as providing a choice to consumers in success of the existing mobile network operators is compromised if they are not able to invest in using the terms of access to services. For the mobile market in particular, latest mobile technologies. Since the terms on which spectrum is made available to state-owned operators risks distorting the market in Thailand, it is important that the overall process is structured in such a way as to be incentives to improve coverage are particularly important since open to all parties concerned. In particular, any spectrum assigned to state-owned operators should reflect the this can lead to mobile networks providing a key means of value of that spectrum for mobile use (i.e. reflect the prices paid by commercial operators for similar spectrum). connecting users in remote or hard-to-reach areas without other This reinforces the importance of the spectrum assignment process, as noted previously. forms of broadband connection. • Infrastructure sharing – as noted above, upgrading networks to provide advanced 3G and 4G services is costly and operators are under pressure to manage the costs of network roll-out in the best way possible. Avoiding duplication of infrastructure through voluntary infrastructure sharing is one way this can be achieved. In this Other benefits from competition within telecommunications markets include the following: context, the terms under which any network assets are shared between commercial and state-owned operators should be such that particular operators are not able to obtain advantages over other operators by participating • Price – in a competitive, investment-led market, • Availability – better coverage and lower prices, both in a infrastructure sharing arrangement with state-owned companies. This is important both in terms of the best consumers tend to benefit through lower prices for factors that can be linked to network competition way to use public funds as well as how prices in downstream markets (i.e. retail of 3G/4G services to mobile services. in the mobile market, lead to greater availability of users) are regulated. services, which will drive take-up and use. This has a • Roll-out of new technology – as discussed in this number of positive benefits for society as described report, the roll-out of 4G networks is costly, but in this report, in terms of promotion of a digital competition between operators is an effective way economy. of incentivising privately financed operators to invest in new technology as a means of providing • Customer service – in a competitive market, differentiation and delivering innovation. This also operators are increasingly incentivised to provide applies in the fixed market – for example in relation the best service to their customers to avoid loss of to the rollout of super-fast broadband networks reputation leading to customer churn.

It is noted that, despite competition between the privately owned operators, both fixed and mobile markets in Thailand are still also influenced by the state-owned companies. In the mobile sector, the two state-owned companies each have a small market share, but their impact on the market is much greater as a result of the legacy concession arrangements for spectrum access, and resulting build-transfer-operate arrangements. These arrangements are evident in various recent market developments such as the reported infrastructure sharing agreements between CAT Telecom, True and DTAC. Accordingly, despite their small share of the mobile market in Thailand in retail terms, there are particular policy considerations relating to the future role of the state-owned operators that should be borne in mind, both in terms of the key policy decisions that need to be taken to encourage 4G roll-out (e.g. in regard to spectrum), and in relation to other policy areas relevant to the mobile market, such as infrastructure sharing.

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In this section of the report we provide a summary of conclusions and recommendations from the study. These are aimed at helping the mobile industry and the government Recommendations of Thailand to drive the social and economic benefits from availability of mobile broadband services as described in this for mobile broadband report, both via contributions to GDP and job creation, and in 6 terms of accelerating the achievement of the government’s goals growth for Thailand’s digital economy.

A summary of the study’s key conclusions is as follows:

• The mobile industry in Thailand contributes • As well as driving contributions to the economy in significantly to the national economy in terms of Thailand, mobile networks also generate indirect GDP growth and job creation. In terms of economic benefits through the operators’ investment in benefits, our modelling suggests that provided there applications and services that drive the digital are accommodative government-led policies to economy, benefiting society in various ways. promote further investment in broadband services Furthermore, as mobile networks are used for an by the main providers of those services (including increasingly wide range of services, their impact on mobile broadband), broadband connections the economy, and the social benefits they provide, penetration in Thailand could increase from 52% should continue to grow. The mobile operators in in 2013 to 133% by 2020. What this implies for the Thailand are positively contributing to the digital Thai economy is that a cumulative GDP increment economy in various ways, and it is expected that of USD23 billion (THB730 billion) could be added by further roll-out of 4G will enable them to contribute the end of the period. further. Section 4 in this report gives a number of examples of their contributions. • A significant proportion of these benefits could come from mobile broadband specifically (compared to • The swift adoption of 3G mobile data services in broadband as a whole), assuming that the legislative Thailand indicates that mobile users in Thailand are and policy environment in Thailand continues to interested in these services. Hence, there is likely support the mobile sector (e.g. in terms of availability to be demand for 4G in Thailand. Further delays to of sufficient spectrum to enable investment in new the award of 4G spectrum could mean a risk of not technology and infrastructure). In addition, new satisfying this demand, which would have a negative skilled jobs in infrastructure and service roll-out will impact on the economic benefits described in this be created through the further expansion of 4G report being fully realised, as noted above. networks, creating opportunities for the population and workforce in Thailand to improve their abilities and skills to use the latest mobile technologies and state-of-the-art broadband services.

34 | Recommendations for mobile broadband growth Recommendations for mobile broadband growth | 35 Socio-economic impact of mobile broadband in Thailand Socio-economic impact of mobile broadband in Thailand

Key recommendations are as follows:

• The estimated benefits for the Thai economy depend on favourable overall developments in the country and • The award of 4G spectrum in Thailand should be designed to achieve the most effective use of the currently the successful implementation of the plan that the government of Thailand has set out for the digital economy. available mobile spectrum. An assignment process for the available spectrum that is implemented by an Potential threats that may jeopardise the impact of broadband on the Thai economy include, among others, independent regulator should ensure that the needs of individual operators can be accounted for. The political change leading to economic and social uncertainties, delayed implementation of government policies government needs only intervene in terms of conditions within this award where necessary. For example, and failure to enact demand-side policies. For the mobile market in particular, a lack of investor confidence intervention might be limited to any measures needed to ensure a level playing field in terms of access to is likely if 4G spectrum assignment is not forthcoming. Failure to address these threats could jeopardise a spectrum between the privately owned operators in Thailand and the state-owned companies, noting possible significant proportion of the benefits stated in this report. For the mobile market, award of 4G spectrum as well conflicting requirements for the government in this regard, as noted below. Other important considerations as continued access to existing spectrum (in the 850, 900MHz and 1800MHz bands) are key priorities. in terms of spectrum assignment are the conditions of the spectrum awarded, which should be technology- neutral so as to promote investment in the latest technology, and to give the ability to innovate, and the licence tenure – ideally, licences should give operators long term certainty for investment in use of the spectrum (e.g. a • Competition between the three largest mobile operators in Thailand should lead to further investments being 15–20 year term, or longer). made to improve the coverage of 4G services once spectrum is available, as well as incentivising the operators to invest in the latest 4G technologies. This will, in turn, contribute to the achievement of the government’s digital economy goals. The government should therefore ensure that all measures necessary to encourage • In line with experience in many markets around the world, the spectrum that is planned to be awarded for 4G competition between mobile networks and more broadly for the telecommunications market as a whole are in use (in the 900MHz and 1800MHz bands) is unlikely to be sufficient to meet the operators’ future spectrum place – most notably, in terms of the planned spectrum auction due to happen in 2015, for which there is now needs in full. Hence, it is important that the government considers plans for future spectrum awards as soon an urgent market need, but also in terms of regulation favouring choice and competition across the market, as is practical (reflecting the anticipated demands for more 4G spectrum to be available in the future). Re- both in terms of retail and wholesale telecommunications provision. allocation of spectrum in the 700MHz band for mobile use, in full alignment with the APT700 band plan, would be a key step towards making further spectrum available in future, along with other capacity-providing bands such as 2.3GHz and 2.6GHz. Spectrum that becomes available for 4G in the future should be assigned using an • Effective regulation is also needed to ensure the successful implementation of 4G as well as to oversee the appropriate market-based process to award spectrum licences, in line with international best practice. effective functioning of competitive mobile markets more broadly. International experience suggests that an independent regulator – structurally and functionally separate from the government – is essential to ensure greater investor confidence and hence leads to further investment being made in new technologies. • In terms of managing the costs of 4G roll-out in Thailand, voluntary infrastructure sharing is emerging Market based approaches to spectrum assignment are appropriate when new spectrum licences are being internationally as a means of managing network cost, in particular for roll-out in remote, rural and under-served awarded, and when demand for licences exceeds supply. Greater clarity in Thailand concerning the roles of the areas. The market in Thailand should therefore be allowed to enter into voluntary commercial agreements government and the NBTC will be fundamental to create a successful 4G spectrum award. The NBTC, working if they wish to, in order to enable faster roll-out of mobile services. It is noted that that there are potentially under the policy guidance of the government of Thailand, should be responsible for issuing and administering diverging objectives for the government as a result of sharing arrangements with the state-owned operators (as 4G licences – and for monitoring the subsequent network implementation against any licence conditions (e.g. described in Section 5). coverage or roll-out requirements). Ensuring that all spectrum used for 2G, 3G and 4G services is administered via a licensed regime (rather than under concession) is also an important goal.

36 | Recommendations for mobile broadband growth Recommendations for mobile broadband growth | 37 Socio-economic impact of mobile broadband in Thailand Socio-economic impact of mobile broadband in Thailand

Annex A

Figure A.1 Methodology for economic ICT development index – Asia–Pacific region (2013) impact assessment Korea 8,9 In this section of the report we provide a summary of conclusions and Hong Kong 8,3 recommendations from the study. These are aimed at helping the mobile Japan 8,2 industry and the government of Thailand to drive the social and economic Australia 8,2 benefits from availability of mobile broadband services as described in Singapore 7,9

developed New Zealand 7,8 this report, both via contributions to GDP and job creation, and in terms T C of accelerating the achievement of the government’s goals for Thailand’s I Macao, China 7,7 digital economy. Brunei Darussalam 5,4 Malaysia 5,2 A.1 Definition Thailand 4,8 We define ‘broadband’ to include both fixed and mobile network connections, including use of smartphones for Maldives 4,7 data, but excluding basic mobile handsets. China 4,6 Fiji A.2 Methodology 4,4 In order to estimate the economic benefits resulting from increased broadband connections penetration, the Mongolia 4,3 current report uses the methodology developed a previous report prepared by Analysys Mason on behalf of the Iran 4,3 GSM Association (GSMA) and Huawei, entitled “Today, tomorrow and the future – managing data demand in Asia Vietnam 4,1 Pacific”. The report examined the developments in the broadband market in the Asia–Pacific region and estimated the derived socio-economic benefits based on the multiplier approach. The latter approach uses results from Philippines 4,0 published studies examining the impact of increased broadband penetration on the economy to arrive at GDP and Indonesia 3,8 job creation multipliers. These multipliers are then applied to the forecast change of broadband penetration in the Sri Lanka 3,4 countries of interest to arrive at the estimated benefits on the economy. Bhutan 2,9 developing

In the above-mentioned report, we made a comprehensive review of scientific papers and business reports T Cambodia 2,6 C estimating the impact of broadband on the economy. Based on the collected evidence and a rigorous process of I India 2,5 filtering and normalisation of variables we arrived at consensus estimates. Our results showed that depending on a country’s ICT maturity, a 10 percentage point increase in broadband connections penetration leads to an increase Nepal 2,4 in GDP of between 0.26% and 0.92%. In terms of job creation, the addition of 1000 new broadband connections Lao P.D.R 2,4 results in the creation of up to 33 new jobs. The differentiation between ICT developing and developed nations has Solomon Islands 2,3 been done based on ITU’s ICT development index. Pakistan 2,1 More details about the approach we used can be found at: http://www.gsma.com/spectrum/today-tomorrow-and- Bangladesh 2,0 the-future-managing-data-demand-in-asia-pacific/. Myanmar 1,8 The above methodology has been modified in order to take into account the specificities of Thailand. In particular, Afghanistan 1,7 Thailand’s current ICT development dynamics suggests that it would reach ICT maturity within the forecast period 2013–20. In terms of its overall ICT development level, Thailand is ranked tenth in the Asia–Pacific region and stands at the upper end of the developing countries’ group. Given its position and accommodative government Source: ITU, Analysys Mason, 2015 policies, it is likely that it will pass into the developed nations group in 2016.

38 | Annex A Annex A | 39 Socio-economic impact of mobile broadband in Thailand Socio-economic impact of mobile broadband in Thailand

Figure A.2 Figure A.3

ICT development index forecast – Thailand (2010–20)24 Thailand’s position on the ICT development curve

2020 6,1 5,9 2013 5,5 5,7 5,1 5,3 4,8 4,9 2010

3,3 3,4 3,5 investments of broadband impact as a result GDP impact as a result Cumulative

LOW Level of ICT development HIGH

Source: Analysys Mason, 2015

In order to take into account the expected change in ICT dynamics and impact on the Thai economy, we examine two phases of the impact of broadband on the economy. In Phase 1 (2013–16) we use the emerging nations multiplier, whereas in Phase 2 (2016–20) the developed nations value is used.

Figure A.4

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Methodology for assessing Thailand’s ICT maturity and impact on the

Forecast economy

Source: ITU, Analysys Mason, 201525 Developing country Developed country GDP and jobs multiplier GDP and jobs multiplier

This implies that as ICT maturity is reached, the expected impact of broadband on the Thai economy will slow down. As Thailand moves along the ‘S-curve’ and reaches ICT maturity, it will move to a phase of diminishing Phase 1 Phase 2 returns from broadband investments in terms of direct effects. However, Thailand will continue to derive benefits from induced effects, in line with the benefits reaped by other developed nations. 2013 2014 2015 2016 2017 2018 2019 2020

Source: Analysys Mason, 2015

24. Due to a change in the forecasting methodology done by the ITU in 2013, the index scores for 2012 and 2013 are not entirely comparable. 25. The red line in the graph indicates where we have estimated that Thailand will switch from emergent status to developed status.

40 | Annex A Annex A | 41 Socio-economic impact of mobile broadband in Thailand Socio-economic impact of mobile broadband in Thailand

Annex B Annex C Modelling inputs and assumptions International examples of digital Figure B.1 economy initiatives Total broadband connections – fixed, mobile broadband and smartphones Figure C.1 90 (millions) 82 87 Mobile agriculture – Bangalink, Bangladesh case study 69 76 59 48 35 In Bangaldesh, Banglalink provides farmers with useful market information

Banglalink’s mobile agriculture services have been widely highlighted as examples of how ICT can be made accessible to rural communities and used to enhance standard of living. 2013 2014 2015 2016 2017 2018 2019 2020 It has empowered farmers with market information so that they can get a fair price for

Source: Analysys Mason, 2015 their goods as well as information on weather conditions and other relevant agricultural information services. Figure B.2

Thailand’s emerging/developed economic and demographic Key Facts indicators (2013 vs. 2020) Description VimpelCom subsidiary Banglalink has 3 mobile agriculture initiatives: • Krishi Bazaar 2474: agricultural marketplace for farmers, providing current Population GDP (billion ICT BB connections/ ICT index (million) USD PPP) classification pop. % prices for crops, and connecting buyers and sellers. 2013 67 964 4.76 Emerging 52% • Krishi Jigyasha 7676: agricultural information service. 2020 68 1,487 6.09 Developed 133% • ‘Mobile-based Agricultural Information Service’: weather warnings, and critical agricultural information delivered to farmers, government officials Source: Analysys Mason, 2015 and NGOs

Digital economy Improves accessibility to ICT services for rural communities and enhances Figure B.3 alignment competitiveness of local farmers by gaining information on pricing and providing connections between buyers and sellers Cumulative incremental impact on the Thai economy (2014–20) Status Krishi Bazaar was launched in 2011 and gained 180 000 subscribers within 3 months of launch.The call-centre based information service (Krishi Jigyasha) Percentage point receives 40 000 calls per month, from 120 000 users, and Krishi Bazaar Cumulative incremental Cumulative incremental change in bb connection GDP effect (billion USD) GDP effect (billion THB) receives more than 12 000 calls per month penetration 2013-2020 Estimated impact 81 23 730 Source: Analysys Mason, 2015 Source: Analysys Mason, 2015

42 | Annex B Annex C | 43 Socio-economic impact of mobile broadband in Thailand Socio-economic impact of mobile broadband in Thailand

Figure C.2

Mobile health – Bharti Airtel, India case study

In India, Bharti Airtel supplies healthcare information to large segments of the population

Bharti Airtel’s mHealth SMS alert packs make health information readily available to the large segments of the population in India that lack Internet access. Subscribers to the service get instant access to expert medical advice.

Key Facts

Description Bharti Airtel has two consumer-focused mobile health initiatives, powered by a clinical decision support solution, staffed by accredited nurses and doctors. • Mediphone: A 24/7 general medical information and advice service. • mHealth SMS alert packs: Information and consultations for specific health-related topics.

Digital economy • Specific advice for certain consumer sectors (e.g. women) alignment • Services are targeted at low-income populations but more recent Medibank service is targeted towards middle and upper-income consumers, but in rural areas where access to healthcare is poor

Status • Airtel mHealth SMS alert packs launched in June 2011. • Mediphone launched in November 2011.

Source: Analysys Mason, 2015

44 | Annex C To download the full report please visit www.gsma.com/spectrum/resources

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